Click on Chart to Enlarge
This is a 4 hour chart of the SPY etf which shows the very sharp bearish divergence that is currently present on the MACD indicator. Despite the typical breakout buy pattern that has developed here, I think the market could certainly still be topping here. For those long on the breakout, I would suggest a stop below the July 26th low. Based on the possible pattern structure at play, time is nearing its maximum likely extent for a completion point as indicated in a prior projection for a top in stocks.
The multi time frame bearish divergence on the MACD also continues to persist and has now added a daily time frame mild bearish divergence to the mix. For multi week trading positions, I would suggest a break of the July 26th low as a possible short entry. For investment purposes, the move down from May-June was an outright correction and should be viewed as key support for the uptrend in stocks. A failure of this current breakout to hold followed by a move below the June low (red line and arrows on chart above) could signal the completion of a bull market top.
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